oppn parties GDP: Brakes on Economic Recovery?

News Snippets

  • Supreme Court asks journalists to be responsible and publish only the official version of news after it was brought to its notice that migrant exodus started after the 'fake' news that the lockdown will be extended to three months
  • Small saving rates slashed by the government by 140 basis points
  • The Centre says that the exodus of the migrants was stopped to save villages and prevent community transmission
  • The Centre says March 31 will remain the closing date for FY 2019-2020 and no change will be made for Covid-19 disruption
  • Tablighi Jamaat fiasco puts several states on high alert, attendees and their contacts being traced
  • Stock markets recover on the last day of the financial year, but the sentiment remains weak
  • The government says Covid-19 is still in local transmission stage in India
  • Government scotches rumours of extending the lockdown beyond April14. Says no such plan
  • Centre asks states to give shelter and food to migrant workers to stop them from taking to the streets
  • RBI cuts repo rate by 75 bps, the steepest in 10 years
  • Centre writes to states regarding laxity in monitoring people who had arrived from abroad between January and March
  • Kerala reports a spurt in new cases
  • With 124 fresh cases on Friday, the number of reported cases in India stand at 854
  • Five of a family, including a 9-month-old-baby test positive for Covid-19 in Nadia district in West Bengal on Friday
  • The Pakistani army is reportedly forcibly moving all Covid-19 patients to PoK and Gilgit
Total count crosses 1600 in India with 52 deaths and 146 recoveries on Tuesday, spurt in cases in Maharashtra and Tamil Nadu
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GDP: Brakes on Economic Recovery?

By Sunil Garodia
First publised on 2018-12-03 08:20:13

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
The signs of economic recovery in the first quarter of FY 2018-19 are showing some signs of reversal, although that may be due to temporary factors like rising oil prices and the weakening rupee. GDP grew at 7.1% in the second quarter (July-September) this year, compared to a robust 8.2% in April-June. Agriculture, manufacturing and mining faltered to bring down the figure. The gross value added (GVA) in agriculture, forestry and fishery grew at only 3.8%, down 1.5% from the last quarter. This was mainly because kharif-season foodgrain output grew at a mere 0.6% compared to 1.7% in the last quarter. This situation is not going to improve in a hurry as there has been below-normal rain this monsoon resulting in lower rabi sowing (shortfall is estimated between 8 to 10% till November). That is going to deepen the distress in the farm sector and weaken the demand for goods in the hinterland causing a cascading effect on all sectors. Manufacturing, on the other hand, nearly halved from the last quarter posting an expansion of just 7.4%, down 6.1% from the 13.5% posted in April-June.

The only bright spot is the rock-solid gross fixed capital formation (GFCF) that measures gross net investment in the economy. It grew at 12.5%, up from the 10% registered in the first quarter, and was 32.3% of the GDP. There has also been a revival in the non-food bank credit. These are encouraging signs for the economy as demand for investment is obviously generated by hopes for future demand for consumption. But the government must put a leash on its spending on non-essentials. The figures for fiscal deficit show that it has ballooned to gobble up the entire budget estimates for the full year in the first seven months. Despite assurances by the finance minister, there is no way the government can keep it down to 3.3% of the GDP. General elections next year, along with uncertainties in global trade, means economic management has to be at its best if the economy is to revive.